De Beers Reduces Prices at November Sight

RAPAPORT... Sightholders welcomed De Beers' decision to lower pricesat this week's rough-diamond sale, but noted that further discounts werenecessary to improve profits in the manufacturing sector. The company reduced prices of higher-end goods by 5% to7% at this week's November sight, and offered deeper cuts in cheaper categories,sources reported. The move was a response to uncertain polished demand and slimmidstream margins, which has impacted manufacturers' appetite for rough. "It's not nearly enough, but it's in the rightdirection," a sightholder specializing in larger goods told Rapaport News. In those items weighing 2 carats and more, De Beers letclients sell 20% of goods back to De Beers, enabling them to keep thebetter-value rough and avoid taking on unwanted inventory, the sightholder reported. That allowance -known as buybacks - was down from the 30% it offered for the larger stones atthe previous sight in September, the source explained. Under the buyback policy, clients may sell back up to afifth of the goods they purchase without it affecting their "demonstrateddemand" -sightholders' track record of rough-buying that De Beers uses to determinefuture allocations. The company previously allowed 10% buybacks, but increasedthat in the second half of this year to ease the pressure on the market. De Beers has kept prices stable this year, instead respondingto the slowdown by restricting supply by allowing clients to defer, reject orsell back more diamonds than usual. It slashed prices in November 2018 and June2019, but those reductions were on lower-quality items. Sightholders continuedto experience thin profit margins, with many dealers making a loss whenreselling goods on the secondary market. "Even if sales are good, the margins are difficult," anIndia-based sightholder explained. "Something has to be done, otherwise thingswill just continue as they were. So this is good, as they had held on for along time [without lowering prices]." An oversupply in the midstream has negatively affectedpolished prices this year, with the RapNet Diamond Index (RAPI?,,?) for 1-caratdiamonds sliding 4.7% between January 1 and November 1. As a result, the marketfor smaller and larger, higher-quality rough is under pressure, miner GemDiamonds said Tuesday while reporting a 55% drop in third-quarter sales to$36.3 million. De Beers declined to comment on pricing. It is scheduledto release the sales total for the sight next week.Image: Rough-diamond sorting at the offices of Debmarine Namibia, Namdeb and Namibia Diamond Trading Company in Windhoek, Namibia. (Ben Perry/Armoury Films/De Beers)